Released: August 25, 2008

Markets need more regulation, Fed told

Source: Sue Kirchhoff, USA Today

Financial markets need to be more tightly regulated to prevent financial crises and quash perceptions that some firms are too big to fail and will be rescued by the government, central bankers and economists suggested at the Federal Reserve’s annual policy conference.

Major changes are probably years away. In the meantime, as Fed Chairman Ben Bernanke noted, businesses and consumers are feeling the impact of the current financial crunch as economic growth softens and unemployment rises. The Treasury Department faces a possible bailout of mortgage giants Fannie Mae and Freddie Mac, and the Fed is continuing emergency lending to strapped banks.

“The crystal ball at this stage is unusually unclear, given that we are a year into this (financial) crisis,” Stanley Fischer, governor of the Israeli central bank, said in closing remarks Saturday.

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